The cryptocurrency crisis that the market experienced recently has taken many by surprise. Some traders and investors started thinking whether to invest now or later.
Cryptocurrencies are presented as something extremely important and valuable to society: a ray of light in the dark. But is it really so? What determines the value of a cryptocurrency? In this article we will try to find the answer to this question.
Cryptocurrency
How did we reach this?
“This is a change in the game system” is the first thought that pops up when people hear the word “cryptocurrency”. This scene makes sense. The rules of the modern market are changing rapidly. What everyone was thinking was a joke or a short-term trend becoming part of the new economic order. But what does this really mean for modern and future society and its economic system?
Imagine that the market is a living being. Like everyone else, it grows, develops and goes through several stages of development to improve and, as a result, have a higher chance of survival.
Certain components/products are required for the existence of something in the market, that is undoubtedly. But money is also very important in any market.
In prehistoric times, people simply exchanged one commodity for another. One good or service was payment for another. However, as the market grew, such a system proved ineffective. So what is now has become.
Is cryptocurrency a replacement for standard money?
Cryptocurrency changes the rules of the entire market with its very existence. They show that even money, which is very conservative and outdated, can become digital and modern. Today, you can convert coins easily and you do not need to visit specialized centres. You can use a platform like the cryptocurrency exchanger Godex.io.
Many people now ask themselves the following question: is cryptocurrency replacing the standard currency? According to a report from the company Futurism, this is a very likely outcome. But this transition will bring about more changes than you can imagine. The entire infrastructure around us will change to adapt to the new world. However, it is still far away.
In today's world, fiat money remains the backbone of the global economy. Cryptocurrencies will require a lot of investment to become a worthy replacement for traditional money.
What Makes Cryptocurrencies So Valuable Today?
Cryptocurrencies are taking over the market today, but why is it considered so? Here are 6 factors that affect the value of cryptocurrencies.
Value
Value is the use of something to get something. You can use cryptocurrency to buy what you want. The easier it is to use the currency to buy goods or services, the higher its value. Furthermore, price is an indication of the speed at which a currency can be transferred from one place to another. This factor is also important in determining the value of a cryptocurrency.
Live long
Regular money works only as long as it remains physically intact. If you cut or tear a banknote, the latter loses its value. Cryptocurrencies have no physical form, which means they cannot be damaged like regular banknotes. This means that they do not lose their longevity so easily.
Mobility
Do you like being able to access something quickly? This is one of the important values of modern cryptocurrencies. The faster they are, the more people will buy them. You can trade cryptocurrencies or buy goods quickly as coins move rapidly from one point to another. So, at some point, you will forget the difference between regular money and cryptocurrencies, as their movement time will be the same.
Delimitation
When demand exceeds supply, the commodity becomes valuable. A good example of this rule is the price of branded goods or jewelry. Such items are not available to everyone and are therefore very valuable.
The same rule applies to cryptocurrencies. The limited number of certain cryptocurrencies makes them more expensive and valuable in the market (like LTC or XLM).
Divisibility
One of the core values of fiat money is that it can be divided at will. If you have to pay 50 USD, you can use 10 5 USD tickets or 5 10 USD tickets.
Modern cryptocurrencies can also be broken down into smaller parts to make financial transactions easier. You should not buy all cryptocurrencies, only 1/10 if it suits you.
Risk of forgery
Fake money is a big problem for every financial institution in the world. When the government creates a new way to protect banknotes, people find new ways to avoid it and it is an endless circular process.
Cryptocurrencies are different from fiat money. They usually operate on decentralized blockchain systems, making the system difficult to hack, almost impossible.
Thoughts and conclusions
As is the case with regular money, many factors influence the determination of the value of a cryptocurrency. If you understand these factors, it will be easier for you to understand the fluctuations in the price of coins, it also helps in predicting future price changes. If you have basic knowledge and follow the latest news, you should have no problem in the crypto space.
